San Diego

To whom much is given, much shall be required.

Regular readers know that I’m not in the habit of quoting scripture. But this line found in the gospels of Matthew, Mark, and Luke has a bit of new relevance this morning, as Facebook’s initial public offering—valuing the company at $106 billion at the opening bell on the NASDAQ Exchange—begins a process that will turn hundreds of Facebook shareholders, including current and former employees, into millionaires.

The real windfall won’t come until later this year: lock-up rules mean insiders and other major shareholders can’t start selling their shares until three to six months after the IPO. But that’s actually sort of convenient, because it leaves these soon-to-be-tycoons some time to think about what they’ll do with their new resources.

Of course, there will be the inevitable, entirely reasonable burst of materialism. Silicon Valley’s realtors, travel agents, and Tesla dealers will experience a welcome bump in business. A lot of old Ikea furniture and Sony stereo equipment will end up on the curbs of Palo Alto, displaced by Ligne Roset and Bang & Olufsen.

But if Facebookers are anything like their predecessors at PayPal and Google, their new toys won’t distract them for long. They’ll eventually fan out across Silicon Valley and found their own startups, or start investing in their friends’ companies, or both.

“You are going to make hundreds of millionaires and see a lot of new startup activity, because these kids are going to start companies on their own,” says Vivek Wadhwa, a scholar of entrepreneurship with appointments at Stanford, Duke, Emory, and Singularity University. “It’s going to be a big boom for Silicon Valley.”

Now, if you only looked at the record to date, you wouldn’t get the impression that Facebook’s alumni are especially prolific—and you’d be forgiven for wondering if they have any interests outside of social networking, collaboration tools, and Web infrastructure technologies. With help from CB Insights, which has been preparing its own study of the “Facebook Mafia,” I did a search for companies founded by Facebook alumni, and turned up fewer than a dozen examples:

Asana (Web-based task management) – Dustin Moskovitz, Justin Rosenstein
Cloudera (Apache Hadoop distributions) – Jeff Hammerbacher
Cove (collaboration, acquired by Dropbox) – Aditya Agarwal, Ruchi Sanghvi
Daily Strength (online support groups) – Doug Hirsch
Jumo (social networking for non-profits, merged with GOOD) – Chris Hughes
MemSQL (database management software) – Eric Frenkiel
Path (social networking and media sharing) – Dave Morin
Peixe Urbano (Brazilian local commerce site) – Julio Vasconcellos
Quora (question answering) – Adam D’Angelo, Charlie Cheever
Storm8 (mobile games) – Perry Tam, William Siu
Trialpay (targeted advertising) – Eddie Lim

This isn’t a terribly long list, at least compared to the number of companies created by ex-PayPal people or ex-Googlers. But the real Facebook diaspora may only get underway six to 18 months from now, as the lock-up period expires and Facebook employees realize that working for a public company isn’t nearly as fun as working for a startup. An IPO is “like getting married,” Wadhwa points out. “The engagement is fun but after that you have all these responsibilities. Every quarter you are accountable to the public markets, and if anything goes the slightest bit wrong things get very nasty. The Silicon Valley kids won’t like it.”

So let’s say it’s early 2013 and antsy young engineers and product managers are leaving Facebook in droves and setting up their own companies. What big problems should they tackle? Or, as venture capitalist Michael Greeley put it yesterday, “What is to become of all this liquidity?”

It would be understandable, but disappointing, if ex-Facebookers only pursued the things we already know they’re good at. It’s clear that when you gather a team of star Stanford- and MIT-trained engineers, lock them in a room with a case of Red Bull, and give them some big-data problem—say, how to store and retrieve camera-phone photos from 800 million people—they can devise diabolically efficient algorithms to solve it. But how many more mobile social apps, enterprise collaboration tools, and infinitely scalable databases does the world really need?

The sad truth is that today’s startup founders swarm around a small thicket of opportunities in the cloud, mobile, and Web spaces. Even one of the valley’s leading iconoclasts, Y Combinator founder Paul Graham, occasionally seems to have trouble thinking outside the Internet box. As a sort of dare to rising entrepreneurs, Graham recently published a list of “frighteningly ambitious” startup ideas. But at least three of the ideas on the seven-item list—a new search engine, a replacement for e-mail, and a better delivery mechanism for digital entertainment—are just more of the same.

To make the most of their skills—and the long careers they have ahead of them—the coming crowd of Facebook alumni would do well to look outside Silicon Valley for problems to solve. Here are just a few of the ways they could profitably direct their brainpower:

Build untraceable communications tools for activists and dissidents. Twitter, Facebook, and text messaging worked great for organizers of the Arab Spring uprisings—until their governments caught on and started using the same tools to hunt them down. The assignment here: build a system that protects the user’s identity absolutely. Of course, any tool that helps dissidents could also be used by terrorists. Or could it? Figuring out how to favor the white hats over the black would be part of the challenge here.

Create a truly great, cross-platform customer service and support system. Part of being civilized means dealing with the bureaucracies in our lives, whether they’re our governments, our employers, our healthcare providers, or our ISPs. We need technologies that … Next Page »

Waiting for the biotech industry to advance new treatments for male pattern baldness (as well as female hair loss) might seem about as exciting as watching hair grow. But some people have a lot of skin in the game, if you know what I mean.

More than just a few people, actually. San Diego’s Histogen estimates that hair loss affects some 40 million men and 21 million women in the United States alone. Histogen, which has been developing a bio-engineered treatment for stimulating hair growth, says less than 7 percent seek treatment for their hair loss “due to the limitations of available options.”

For these people, any incremental improvement in hair growth can be thrilling—even life-changing—which helps explain a burst of enthusiasm we’ve noticed in recent days in messages penned below a 2011 article about Boston-based Follica on the Xconomy Boston website. With close to 1,500 comments posted over the past 14 months our readers have shown no loss for words, making this one article a defacto online message board and a virtual support group for the follically challenged.

As I reported in 2010, few life sciences companies have gotten as much mileage from a pilot trial that enrolled two dozen patients as Histogen has for its much-anticipated treatment. The company says its formulation consists of proteins, including growth factor molecules, secreted by human fibroblast cells grown in a laboratory culture. The concoction is injected just below the scalp.

Over the past week, gentle and not so-gentle visitors to the Follica comment page have seized on the early results of Histogen’s latest experimental trial, which Histogen CEO Gail Naughton presented a week ago in Raleigh, NC, during the annual meeting of the Society for Investigative Dermatology. Naughton gave an oral summary of the data on May 11 and presented a poster the following day on “Stimulation of hair growth in humans by cell-secreted proteins.”

The data has not yet been published in a peer-reviewed scientific journal, according to a Histogen spokeswoman. “We are not releasing an announcement at this time,” she adds.

Yet Histogen has summarized its early findings on its website, where a PDF copy of the May 12 poster also can be downloaded. The company says 56 patients were enrolled in … Next Page »

So here is my obligatory post on Facebook…which will be the most spectacular IPO of a venture-backed company in the history of mankind…and it just priced tonight.

The shares priced at $38 giving the company a market cap of $104 billion fully diluted, raising $16 billion in proceeds. Of the 421 million shares being sold, 57 percent (or 241 million shares) are being sold by insiders; in the past few years only LinkedIn and Pandora had a higher percentage of shares coming from insiders. Assuming the “green shoe” over-allotment option is exercised, the total amount of proceeds will exceed $18.4 billion. And this is where I want to focus.

Putting aside the potential negative signaling of all this insider selling—and General Motor’s voting with their feet (or tires) this week—what is the impact on the VC industry with all this liquidity? First—according to Fortune—some of the numbers:

—Individual shareholders (mostly Zuckerberg) are selling $3.2 billion of stock and will retain stock worth $27.7 billion

—Institutional shareholders are selling $8.3BN of stock and will still hold $15.8 billion

—This does not include the existing institutional investors (T. Rowe Price, Andreessen Horowitz) which hold about $1 billion of stock and are not selling, nor does it include all the other employees who are now fabulously wealthy

—Of the institutional investors, $5.1 billion of stock being sold is held by institutions which have traditional LPs and/or are themselves LPs. This same group of investors will still have $10.6 billion of Facebook stock yet to be sold.

For me what is most interesting is to speculate about what is to become of all this liquidity. The venture industry has struggled mightily to raise capital; in the past few years the VC industry has raised between $12 to $15 billion annually. As these proceeds are realized and distributed, do much of these dollars get recycled—that is, will underlying LPs begin to increase their allocations to VC as they start to see Facebook distributions? The math suggests that one year’s worth of VC fundraising is now in around half a dozen VC firms fortunate enough to have invested in Facebook!

Additionally, we are watching a very deep and wealthy pool of new angel investors get created and collectively they will play a powerful role in the next wave of great company formation. Much like the “PayPal Mafia” from the last decade which sponsored many of this cycle’s great companies, the Facebook Mafia should do the same over the course of the next decade. These individual investors themselves could become significant LP’s in many venture funds which, if that were to be the case, would further drive VC industry expansion.

Or is this just all wishful dreaming?

This essay originally appeared today on Michael Greeley’s blog, On the Flying Bridge.

Buried in the news of the past month, which was admittedly a busy one, was a press release headlined: “Geomagic Acquires Sensable 3D Design and Haptics Businesses.” As far as I can tell, no media outlets besides Xconomy picked up on this deal or its historical—and now, political—significance. Woe is them.

That’s because “Sensable” would be SensAble Technologies, the Woburn, MA-based maker of touch-based computer modeling and design systems. The venerable New England firm started back in 1993 and went on to pioneer all sorts of applications in 3-D modeling and haptics technology—a field of human-computer interfaces that involves touch feedback, sort of like the kind you feel in modern video-game controllers and smartphones.

After nearly 20 years, SensAble’s acquisition by North Carolina-based Geomagic—the price wasn’t disclosed, but was rumored to be just a few million dollars—is an unceremonious ending to one of the most intriguing companies of its era. [Disclosure: Xconomy CEO and Editor-in-chief Bob Buderi was an early investor in SensAble.]

Yet even more compelling than the company is its founder, a young engineering whiz from MIT named Thomas Massie. Over the years, that whiz kid developed many other passions besides building computer interfaces and running a tech company. Things like energy independence. The pursuit of individual liberty. Faith and family. And guns—lots of guns.

After leaving SensAble in 2003 (read on for what he says about that), Massie moved back to the heartland of his home state of Kentucky and spent a few years running a farm and building a solar-powered, off-the-grid house for his family. Then he got into politics. In 2010, he ran for the office of Judge-Executive of his rural county, and won in a landslide.

Now, in a stunning move to those who knew him in Boston, he is running for Congress in one of the most heated races around the country. He has been endorsed by U.S. Representative and presidential candidate Ron Paul (R-TX) and his son, Senator Rand Paul—both prominent figures in the conservative Tea Party movement. The Republican primary in Kentucky is next Tuesday, May 22, and as of last week polls showed Massie in the lead. Since the county is predominantly Republican, if he wins, he will be the presumptive favorite to represent Kentucky’s 4th District in the U.S. House of Representatives.

That’s right, the boy-wonder genius from MIT—the founder of SensAble, a pioneer of haptics—is now a political hero of the Tea Party. And he wants to reform our government. An unlikely story? You be the judge.

Diversity Was a Catholic

Thomas Massie grew up in northeastern Kentucky, in a small town called Vanceburg, on the Ohio River. From a young age, he was interested in taking apart radios and vacuum cleaners, blowing things up with gunpowder, and building mechanical contraptions—everything from a self-watering flowerpot to a robot arm. He entered numerous science fairs and competitions from grade school through high school and often won, despite not having much in the way of resources. That changed when he got to MIT as a freshman in 1989 and was surrounded by world-class facilities (and fellow geeks).

“He was probably the first person from his ZIP code that ever went to MIT,” says Bill Aulet, a current MIT faculty member who helped lead SensAble Technologies as its president from 1996 to 2002. “He would say, ‘Diversity where I came from was a Catholic’—a Catholic, singular.”

As an undergrad, Massie worked in roboticist Kenneth Salisbury’s lab in the old Artificial Intelligence Laboratory. (Salisbury would move to Stanford University in 1999.) One of their later projects was to build a device that would simulate being able to touch and manipulate objects in the virtual world with your hand. It consisted of a computer-connected robot arm with a thimble on the end that you could stick your finger into; when you moved your finger, the computer sensed your precise motions through the movements of the robot arm, and then provided force feedback through the apparatus to simulate the feel of an object on the screen (a button, say). Massie built early versions … Next Page »

We’re anticipating a lot of news out of a big cancer conference that begins next week in Chicago. Here is your head start.

—Cancer researchers have talked for decades about finding the silver bullet that could kill cancer cells without harming the healthy cells nearby. These days, the industry is focusing on the development of “empowered” or “armed” antibodies, or antibody-drug conjugates (ADCs). Luke put together a list of venture-backed life sciences companies that are focusing on ADCs. His list includes San Diego’s AnaptysBio, Fabrus, and Ambrx.

—San Diego’s Elevation Pharmaceuticals said a mid-stage dosing trial of its lead drug candidate, an aerosol dubbed EP-101, generated positive results among patients with moderate to severe chronic obstructive pulmonary disease (COPD). The company said it tested four doses of EP-101, with all four doses showing EP-101 was safe and effective in helping COPD patients breathe easier. Elevation raised $30 million in a Series B round five months ago that should enable the company to complete a follow-up round of testing this year.

—With the American Society of Clinical Oncology (ASCO) meeting set to begin next week in Chicago, Luke used his BioBeat column to provide a rundown on eight cancer drugs to watch from biotech companies throughout the U.S. He picked them because they are either on the cusp of reaching the market, or just beginning to show their potential.

—BioSurplus, a San Diego company that provides pre-owned lab instruments to the life sciences industry, said it raised $1.5M to fund its expansion into Boston. The company recently opened similar equipment showrooms in the San Francisco Bay Area and Korea. BioSurplus said most of the funding for the move came from San Diego-based KI Investment Holdings.

—Good News for Xconomy: Our national biotech editor, Luke Timmerman, is one of four finalists in the blogging category of this year’s Gerald Loeb Awards for Distinguished Business and Financial Journalism. Whatever happens, he’s put Xconomy in good company. The other blogging finalists work for The New York Times, The Washington Post, and Reuters. Winners will be announced June 26.

A few years back, molecular geneticist Tom Maniatis was approached by a Harvard Business School student with a heart-wrenching story. The student, Avichai Kremer, then 29, had been diagnosed with amyotrophic lateral sclerosis (ALS), otherwise known as Lou Gehrig’s disease. Kremer had an unusual idea: He wanted to advance ALS research by offering million-dollar prizes to scientists who made meaningful contributions to research into the disease.

Maniatis was both skeptical and intrigued. He had lost his sister to ALS, and was the longtime chair of the research and drug-development committees for the Amyotrophic Lateral Sclerosis Association. “The prize model had never been tried in life sciences,” says Maniatis, who is now a professor and chair of the department of biochemistry and molecular biophysics at the Columbia University College of Physicians and Surgeons (and one of our Xconomists). “At the time Avi entered the scene, the ALS community was pretty small. And the drug companies did not see it as a profitable pursuit.

As it turns out, Maniatis says, ALS was a perfect model for a prize-based research approach. In 2006, Kremer’s idea became Prize4Life, a Cambridge, MA-based nonprofit that is now one of the most influential forces in ALS research. In addition to offering a $1 million research prize each year—-the latest of which will be announced at a fundraising gala in New York on June 6—Prize4Life has spearheaded several programs designed to mobilize and energize scientists working in ALS. Kremer and a handful of his HBS classmates are running the entire endeavor, says Maniatis, who is a member of Prize4Life’s scientific advisory board. “They had such an affection and respect for Avi that many of them put off jobs to stay in Cambridge and work for this nonprofit,” he says.

Kremer and his classmates spent more than 1,000 hours talking to experts from the drug industry, academia, and nonprofits, before officially launching Prize4Life’s model. “What inspired me was the success of the Ansari X-Prize,” Kremer says in an e-mail, referring to the California organization that provides incentives to researchers in education, energy, the environment, life sciences, and exploration. “It proved to me that a prize can correct a market failure.” In Prize4Life’s case, he explains, that market failure is the lack of capital “to focus innovation coming from academia and small biotechs on ALS,” he says.

This year’s award will mark the third effort by Prize4Life to support ALS scientists with $1 million in research funding. In 2010, 33 teams of scientists—about half of whom came from academia and the other half from pharma companies—competed for the organization’s first $1 million award by proposing treatment protocols meant to extend the lives of mice with ALS by 25 percent. Ultimately, none of the teams met the goals set out by Prize4Life, and the $1 million prize went unclaimed, though several of the applicants are continuing their research with the organization’s support. (Prize4Life also sponsors a number of smaller research grants.)

Last year, Prize4Life awarded $1 million to Seward Rutkove, co-founder of Woburn, MA-based Convergence Medical Devices, for his work developing a biomarker that can measure the progression of ALS in patients. The tool is designed to make clinical trials of potential new drugs more efficient.

This year’s major prize will be a revival of the inaugural award’s goal—the promise of $1 million for research that demonstrates 25 percent survival in ALS mice. “In the previous round, no one was able to achieve that, but there are so many … Next Page »

What began as an effort by a couple of San Diego engineers to bring computer vision to the iPhone has resulted instead in “Skqueak,” a mobile app that enables users to sketch over photos and videos on their iPhones. The Skqueak app is now available in Apple’s iTunes App Store.

Sanjay Nichani, who moved to San Diego in 2006 after working at Cognex (NASDAQ: CGNX) the Natick, MA-based pioneer in machine vision, says he founded Pelfunc (Skqueak’s parent company) with Ray Fix, another former Cognoid, in mid-2010. The original idea was to develop an app capable of recognizing electric circuit designs or the kind of molecular geometries used to depict chemical reactions.

“We said it would be nice to have audio with the pictures, and that’s how Skqueak evolved,” Nichani says. As the Pelfunc founders made it possible to overlay sketches (along with messages and graphics) with audio over photos and videos, Nichani says they realized what they had was more of a social networking tool than a computer vision app.

By the end of 2010, they decided to run with their new concept, even though “it meant that we’d need to develop a website and backend system support” so users could create their own accounts for storing and sharing their Skqueaks, Nichani says.

Skqueak employs a drawing function that reminds me of Draw Something, the Pictionary-like mobile app developed by Omgpop, the New York company acquired by Zynga in March for $180 million. You draw by dragging your finger across an image on the iPhone display screen.

With Skqueak, however, users also can record audio while they sketch a handlebar mustache and devil’s horns—or anything else—on one of their own photos or videos. The result is a sort of multimedia postcard. The founders envision users sending “Skqueaks” to their friends, attaching them to e-mails and tweets, posting them to their Facebook pages, and even embedding them in their blogs. Here’s an example:

“A big part of our strategy is to use social media to promote Skqueak as a platform, and then to build different verticals,” Nichani says. For example, users could create a multimedia classified ad that could be embedded on Craigslist by taking a photo of something they want to sell—say, a car—and using the Skqueak app to draw arrows that point out the custom wheels, tinted windows, and other features. “There are a lot of possibilities for working with other partners,” Nichani adds.

In developing Skqueak, the partners conducted a … Next Page »

[Updated: 1:30 pm PT, 5/17/12] One of the big dreams in biotech over the past 35 years has been to make drugs that work like “smart bombs” by destroying tumors while minimizing collateral damage. Scientists have learned this is no easy thing, but now that a couple of these types of drugs have been shown to work, a new wave of companies is emerging to see if they can finally turn this vision into reality.

Targeted antibody drugs have been around for a long time, and have been shown to do a lot of good for patients. Some of the world’s best-selling medicines are designed to specifically hone in on cancer cells while mostly sparing healthy tissues. Yet it’s only been in the last several years that a couple of companies—Seattle Genetics and Genentech—have shown proof in clinical trials that they can go a step further than what’s been done with so-called “naked” antibodies. The concept is simple: Take a regular antibody, link it to a toxin, and design the combination so that it unleashes a killer payload on tumors. Done right, you ought to have a drug with more punch than traditional antibodies or chemotherapy.

The idea of making “empowered” or “armed” antibodies is known more formally in industry circles as the antibody-drug conjugate (ADC) business. Most previous attempts to amplify antibodies in the past failed because the toxins broke off and started floating around the bloodstream. That meant the drug never got to the right place, and the treatment caused similar side effects to standard chemotherapy. Seattle Genetics overcame that hurdle with the FDA approval last year of its lymphoma drug brentuximab vedotin (Adcetris). And Genentech is in late-stage trials of its souped-up version of Herceptin called trastuzumab emtansine (T-DM1). Both of these drugs have shown in clinical trials that they can be powerful anti-tumor weapons in very sick cancer patients. And not surprisingly, these successes have inspired a new group of genetic engineers to see what they can do to turn antibody-drug conjugates into mainstream cancer medicines.

“We as an industry now have a lot of experience with naked antibodies for cancer, and some of them are very good, but we know they aren’t perfect,” says Bill Newell, the CEO of South San Francisco-based Sutro Biopharma, a venture-backed startup. “They aren’t magic bullets. But I think as people recognize the valuable contribution antibodies have made to cancer, they naturally ask themselves, ‘how can we make them better?’ Essentially, antibodies are good, but antibodies with a payload may be even better.”

There is so much enthusiasm for the emerging antibody-drug conjugate movement that there’s even a World ADC Summit, now in its third year, scheduled for this October in San Francisco. Given the increasing interest among venture-backed companies that are seeking to come up with new antibody-drug conjugates, or provide new enabling technologies, I thought it would useful to put together a list of companies seeking to play a role. If I’ve overlooked a company you know of, please send me a note at ltimmerman@xconomy.com so I can update the list.

T-DM1. Image courtesy of Genentech

Genentech (South San Francisco). The biotech giant, part of Switzerland-based Roche, has the broadest and deepest experience with antibody-drug conjugates in the world. The company uses technology from Seattle Genetics and ImmunoGen in some cases to make ADCs, but it also has its own proprietary techniques which it doesn’t license outside the company. Genentech has had its most high-profile success with T-DM1, but that’s just one of 25 different antibody-drug conjugates in various stages of development, from discovery through late clinical trials. Nine of Genentech’s 38 cancer drugs in clinical trials—roughly one-fourth of the portfolio—belong to this new class of empowered antibodies. “We’ve really invested heavily in this technology and have the breadth and depth of our pipeline to show for it,” says Genentech spokeswoman Krysta Pellegrino. For a detailed rundown of Genentech’s ADC programs, click here.

Seattle Genetics (Bothell, WA). Seattle Genetics (NASDAQ: SGEN) is one of the two mainstays of the armed antibody field, along with Waltham, MA-based ImmunoGen (NASDAQ: IMGN). The company was founded in 1998 after Bristol-Myers Squibb closed down a Seattle research center that had been dedicated to developing antibody-drug conjugate technology. Besides its work on the new lymphoma drug Adcetris, the company lists six other empowered antibodies in clinical and preclinical development on its website. The company also licenses out its antibody-drug linking technology to other drug developers working on specific projects. The list of collaborators includes Genentech, Bayer, Celldex Therapeutics, Progenics Pharmaceuticals, Astellas Pharma, Daiichi Sankyo, Millennium:Takeda, GlaxoSmithKline, Genmab, Pfizer, and Abbott Laboratories.

ImmunoGen (Waltham, MA). ImmunoGen (NASDAQ: [[ticker:IMGN]) is the other stalwart of the empowered antibody world, having been founded way back in 1981. The company has never made a profit in all those years, and has had some very lean years, but it has been resurgent of late. That’s because it licensed its antibody-drug linking technology more than a decade ago to Genentech, which has used it to make T-DM1. That drug isn’t yet FDA approved, but it passed a pivotal clinical trial back in March, which was the last major milestone it needed to clear before seeking the regulatory green-light. ImmunoGen stands to collect a modest royalty on that product, and like Seattle Genetics, it seeks to use its antibody-drug conjugate technology for its own internal drug candidates, while also making some money by licensing it to other companies working on specific projects. Eli Lilly, Novartis, Amgen, Genentech, Biotest, Bayer, and Sanofi are among its collaborators.

Bristol-Myers Squibb (New York). The pharmaceutical company (NYSE: BMY), which once invested so heavily … Next Page »

Qualcomm (NASDAQ: QCOM) plans to use its well-established model in technology licensing as it advances innovations in wireless charging of electric vehicles (EVs), smartphones, and other devices, according to Qualcomm’s top European executive, Andrew Gilbert.

The San Diego wireless giant, which announced the formation of a wireless charging standards organization with Samsung last week, also remains on track to demonstrate its new charging technology for electric vehicles (EVs) in London this year, Gilbert said. The San Diego wireless technologies giant announced its plans to showcase the new technology with as many as 50 battery-powered taxis in November, shortly after acquiring HaloIPT, the startup developing the technology.

PM David Cameron (left) and Andrew Gilbert

Gilbert came through San Diego accompanied by a deep-green, all-electric Le Mans prototype racer that England’s Drayson Racing Technologies unveiled in London a few months ago. The Lola-Drayson B12/69 EV, which replaced a 5.5-liter Judd engine with a pure electric drive on a standard Le Mans chassis, is projected to reach speeds of 200 mph, and was designed for pit stop recharging with the HaloIPT charging system.

The Drayson racecar traveled thousands of miles to get to San Diego, but Drayson has not conducted any road tests with the vehicle yet. Gilbert said Drayson plans to begin testing its EV racer in coming months as part of a broader campaign to get the International Automobile Federation to sanction an EV competition—perhaps as soon as the souped-up EVs can race for more than 15 minutes before recharging.

During his San Diego pit stop, Gilbert also noted that Qualcomm and Samsung announced the formation of the Alliance for Wireless Power (A4WP) last week during the CTIA conference in New Orleans. As Gilbert noted, wireless electricity transmission has been around since the days of Nikola Tesla (1856-1943) and there may be as many as 20 other companies developing wireless charging technologies. The alliance plans to focus initially on wireless charging technology for devices, but the group expects to gradually draw in members from the automotive sector as well.

Qualcomm has been working in the transportation sector since the company began, mostly in telematics, and continues to provide “silicon and software” for content streaming, navigation services, and related technologies, including GM’s OnStar service. “We work directly or indirectly with … Next Page »

Anyone in business journalism knows full well the power of the Gerald Loeb Awards for Distinguished Business and Financial Journalism. Loeb was a founding partner of E.F. Hutton and a noted author and columnist, and the awards he created in 1957 to promote and recognize great writing and reporting for individual investors have become something akin to the Pulitzer Prizes of business news—the highest honor the field has. To put it mildly, invoking the E.F. Hutton slogan, when the Loeb Awards talk, people listen.

So it is with great pleasure that I share with our readers, underwriters, and other supporters the news announced today that Xconomy National Biotech Editor Luke Timmerman has been named one of four finalists in the blogging category of this year’s Loeb Awards. (This is highly deserved, since Luke can do it all—from breaking news to in-depth profiles to his insightful, extremely popular BioBeat column.)

It is a particularly great honor because Xconomy is the only independent, standalone blog represented in any of this year’s 13 categories, which span newspapers, magazines, books, breaking news, commentary, and more. The other three finalists in the blogging category hail from The New York Times, The Washington Post, and Reuters.

Xconomy is not yet five years old, and to be named alongside such venerable and respected organizations is a great honor—and a tribute not just to Luke but to the entire Xconomy team that works hard each day to bring great journalism and in-depth reporting to our readers. We firmly believe there is still a place for objective, high-quality news, features, and analysis in this day and age of content inundation from all spheres—much of it poorly vetted, or written simply to drive page views—and it is especially gratifying to have that dedication recognized.

Winners will be announced at a banquet in New York on June 26. Thank you Loeb Awards—and congratulations (and good luck) to Luke!

[This is the third in a series of posts about A New Kind of Science. Previous posts have covered the original reaction to the book and what’s happened since it was published. This post first appeared on Wolfram's blog---Eds.]

Today ten years have passed since A New Kind of Science (”the NKS book”) was published. But in many ways the development that started with the book is still only just beginning. And over the next several decades I think its effects will inexorably become ever more obvious and important.

Indeed, even at an everyday level I expect that in time there will be all sorts of visible reminders of NKS all around us. Today we are continually exposed to technology and engineering that is directly descended from the development of the mathematical approach to science that began in earnest three centuries ago. Sometime hence I believe a large portion of our technology will instead come from NKS ideas. It will not be created incrementally from components whose behavior we can analyze with traditional mathematics and related methods. Rather it will in effect be “mined” by searching the abstract computational universe of possible simple programs.

And even at a visual level this will have obvious consequences. For today’s technological systems tend to be full of simple geometrical shapes (like beams and boxes) and simple patterns of behavior that we can readily understand and analyze. But when our technology comes from NKS and from mining the computational universe there will not be such obvious simplicity. Instead, even though the underlying rules will often be quite simple, the overall behavior that we see will often be in a sense irreducibly complex.

So as one small indication of what is to come—and as part of celebrating the first decade of A New Kind of Science—starting today, when Wolfram|Alpha is computing, it will no longer display a simple rotating geometric shape, but will instead run a simple program (currently, a 2D cellular automaton) from the computational universe found by searching for a system with the right kind of visually engaging behavior.

This doesn’t look like the typical output of an engineering design process. There’s something much more “organic” and “natural” about it. And in a sense this is a direct example of what launched my work on A New Kind of Science three decades ago. The traditional mathematical approach to science has had great success in letting us understand systems in nature and elsewhere whose behavior shows a certain regularity and simplicity. But I was interested in finding ways to model the many kinds of systems that we see throughout the natural world whose behavior is much more complex.

And my key realization was that the computational universe of simple programs (such as cellular automata) provides an immensely rich source for such modeling. Traditional intuition would have led us to think that simple programs would always somehow have simple behavior. But my first crucial discovery was that this is not the case, and that in fact even remarkably simple programs can produce extremely complex behavior—that reproduces all sorts of phenomena we see in nature.

And it was from this beginning—over the course of nearly 20 years—that I developed the ideas and results in A New Kind of Science. The book focused on studying the abstract science of the computational universe—its phenomena and principles—and showing how this helps us make progress on a whole variety of problems in science. But from the foundations laid down in the book much else can be built—not least a new kind of technology.

This is already off to a good start, and over the next decade or two I expect dramatic progress in the application of NKS to all sorts of technology. In a typical case, one will start from some objective one wants to achieve. Then, either through knowledge of the basic science of the computational universe, or by some kind of explicit search, one will find a system that achieves this objective—often in ways no human would ever imagine or come up with. We have done this countless times over the years for algorithms used in Mathematica and Wolfram|Alpha. But the same approach applies not just to programs implemented in software, but also to all kinds of other structures and processes.

Today our technological world is full of periodic patterns and other simple forms. But rarely will these ultimately be the best ways to achieve the objectives for which they are intended. And with NKS, by mining the computational universe, we have access to a much broader set of possibilities—which to us will typically look much more complex and perhaps random.

How does this relate to the kinds of patterns and forms that we see in nature? One of the discoveries of NKS is that nature samples a broader swath of the computational universe than we reach with typical methods of mathematics or engineering. But it too is limited, whether because natural selection tends to favor incremental change, or because some physical process just follows one particular rule. But when we create technology, we are free to sample the whole computational universe—so in a sense we can greatly generalize the mechanisms that nature uses.

Some of the consequences of this will be readily visible in the actual forms of technological objects we use. But many more will involve internal structures and processes. And here we will often see the consequences of a central discovery of NKS: the Principle of Computational Equivalence—which implies that even when the underlying rules or components of a system are simple, the behavior of the system can correspond to a computation that is essentially as sophisticated as anything. And one thing this means is that a huge range of systems are capable in effect not just of acting in one particular way, but of being programmed to act in almost arbitrary ways.

Today most mechanical systems we have are built for quite specific purposes. But in the future I have no doubt that with NKS approaches, it will for instance become common to see arbitrarily “programmable” mechanical systems. One example I expect will be modular robots consisting of large numbers of fairly simple and probably identical elements, in which almost any mechanical action can be achieved by an appropriate sequence of small-scale motions, typically combined in ways that were found by mining the computational universe.

Similar things will happen at a molecular level too. For example, today we tend to have bulk materials that are either perfect periodic crystals, or have atoms arranged in a random amorphous way. NKS implies that there can also be “computational materials” that are grown by simple underlying rules, but which end up with much more elaborate patterns of atoms—with all sorts of bizarre and potentially extremely useful properties.

When it comes to computing, we might think that to have a system at a molecular scale act as a computer we would need to find microscopic analogs of all the usual elements that exist in today’s electronic computers. But what NKS shows us is that in fact there can be much simpler elements—more readily achievable with molecules—that nevertheless support computation, and for which the effort of compiling from current traditional forms of computation is not even too great.

An important application of these kinds of ideas is in medicine. Biology is essentially the only existing example where something akin to molecular-scale computation already occurs. But existing drugs tend to operate only in very simple ways, for example just binding to a fixed molecular target. But with NKS methods one can expect instead to create “algorithmic drugs”, that in effect do a computation to determine how they should act—and can also be programmable for different cases.

NKS will also no doubt be important in figuring out how to set up synthetic biological organisms. Many processes in existing organisms are probably best understood in terms of simple programs and NKS ideas. And when it comes to creating new biological mechanisms, NKS methods are the obvious way to take underlying molecular biology and find schemes for building sophisticated functionality on the basis of it.

Biology gives us ways to create particular kinds of molecular structures, like proteins. But I suspect that with NKS methods it will finally be possible to build an essentially universal constructor, that can in effect be programmed to make an almost arbitrary structure out of atoms. The form of this universal constructor will no doubt be found by searching the computational universe—and its operation will likely be nothing close to anything one would recognize from traditional engineering practice.

An important feature of NKS methods is that they dramatically change the economics of invention and creativity. In the past, to create or invent something new and original has always required explicit human effort. But now the computational universe in effect gives us … Next Page »

The pistons of the biggest publicity engine in cancer R&D will start firing this week. It’s time to behold the annual rite of the American Society of Clinical Oncology (ASCO) meeting, the biggest event for showing off what’s new and interesting in the treatment of cancer.

This conference, officially held June 1-5 at McCormick Place in Chicago, draws more than 25,000 physicians, pharmaceutical companies, investors, and journalists every year. Organizers have spent years carefully orchestrating this show to make sure it’s the place for all kinds of market-moving, medical practice-changing, and front-page leading news about cancer. Partly to help drum up suspense, things really get started this week, as thousands of (often outdated and incomplete) abstracts of clinical trial results are posted on the ASCO website, as a preview of coming attractions in Chicago. The abstracts are due out at 6 pm ET on Wednesday.

Despite the excessive hype in this business, where a few extra months of survival counts as a breakthrough, there are really encouraging things happening in cancer treatment. There’s undoubtedly tons of money to be made, which explains a lot about the spectacle that is ASCO. Health insurers now spend an estimated $80 billion a year on cancer care worldwide, and spending in the U.S. is expected to climb an eye-popping 42 percent by the end of 2013, according to a report last year by Medco Health Solutions. There are now about 900 cancer drugs in development.

Most of those drugs will suffer quiet deaths, and never get close to the marketplace, because they aren’t safe enough or don’t work well enough. But here’s a rundown on eight drugs from biotech companies around the U.S. that are sure to make news at this year’s ASCO because they are either on the cusp of reaching the market, or just beginning to scratch the surface of their potential:

—Genentech’s trastuzumab-DM1 (T-DM1) for breast cancer. Evidence has been mounting for years that this “souped-up” antibody drug could be much more potent than Genentech’s original trastuzumab (Herceptin), the pioneering breast cancer medicine that’s almost 15 years old. Now the South San Francisco-based company, a unit of Roche, is getting ready to present data from a pivotal study of 991 women with breast cancer. These women had previously gotten Herceptin, and were randomly assigned to get either T-DM1 or a combo of GlaxoSmithKline’s lapatinib (Tykerb) and capecitabine (Xeloda) chemotherapy.

Genentech said in March that T-DM1 met its main goal of slowing the spread of tumors, and that it was good enough for the company to seek FDA approval of the drug later this year. This study, known as Emilia, also measured survival times. Data on the tumor progression times, and an interim look at overall survival time, will be made public the first full day of ASCO presentations on Saturday, June 2, according to Genentech spokeswoman Emmy Wang. Besides Genentech, this disclosure also means quite a bit to Waltham, MA-based ImmunoGen (NASDAQ: IMGN), which developed antibody-drug linking technology that it licensed to Genentech, in exchange for a “mid-single digit” percentage royalty on worldwide sales of T-DM1.

Partly because this drug is working against a high-profile disease like breast cancer, and partly because of its groundbreaking science as a sort of anti-cancer smart bomb, I’d bet that this drug will be the star of the show at this year’s ASCO. The presentation also happens to be timed for the deadlines of the nation’s major Sunday newspapers. Watch for the headlines on June 3.

Aveo Pharmaceuticals CEO Tuan Ha-Ngoc

—Aveo Pharmaceuticals’ tivozanib for renal cell carcinoma (kidney cancer). The Cambridge, MA-based biotech company (NASDAQ: AVEO) has its biggest-ever presentation coming up this year at ASCO. The company released basic results in January, from a study of 517 patients with renal cell carcinoma, which showed its tivozanib compound was able to keep tumors from spreading for a median of 11.9 months, compared with 9.1 months for sorafenib (Nexavar), an FDA-approved drug sold by Bayer and Onyx Pharmaceuticals. The study was designed to show the Aveo drug could keep tumors from spreading for about an extra three months, so it barely passed. Aveo’s stock fell after the results, but the company has said it is hiring aggressively and getting ready to seek FDA approval. Physicians, investors, and competitors will get their first detailed glimpse at ASCO into what has made Aveo so bullish about tivozanib’s prospects. New details “could provide additional evidence to support a differentiated product profile based on safety,” said Jason Kantor, an analyst with RBC Capital Markets, in a note to clients May 3.

—Onyx Pharmaceuticals/Bayer’s regorafenib for colorectal cancer and GIST. South San Francisco-based Onyx (NASDAQ: ONXX) has been on a roll of late, and it will give physicians and investors a lot of information to chew over at ASCO. Onyx is planning to present data from a pivotal study of regorafenib, a follow-on cancer compound that builds on its success with sorafenib (Nexavar). The company said in January that this new compound offered a slim advantage of about six weeks extra survival time for some very sick patients with colorectal cancer. More data on that trial is expected at ASCO, and so is some new information about regorafenib as a treatment for gastrointestinal stromal tumors (GIST).

The company also will have more to say about … Next Page »

Back in 2008 (exactly 180 columns ago, in fact) I wrote an elegy for the CD-ROM. If you’re under the age of 30, you probably won’t know what I’m talking about, but there was a brief span of time in the mid-1990s—after the emergence of personal computers powerful enough to handle multimedia content, but before the rise of the broadband Web—when CD-ROMs were the only available medium for rich interactive storytelling. Publishers like Corbis, Dorling-Kindersley, Voyager, Broderbund, and Flagtower put out a huge number of boxed “edutainment” titles during this period, in a massive test of the notion that PC software could just as immersive as a good book. They often failed the test—but some of the titles were so skillfully produced, I argued back in ‘08, that they’d never really been surpassed, even in the era of YouTube and JavaScript and 30 megabits-per-second home Internet connections.

But that was before the iPad.

There’s something about Apple’s tablet—presciently described by New York Times tech columnist David Pogue back in January 2010 as “a 1.5-pound sack of potential”—that has reawakened developers to the power of multimedia software as a tool for education and entertainment. Today it’s looking as if my elegy was premature. There’s a new crop of publishers putting out great iPad apps in the casual learning category, with names like Moonbot Studios, Vook, Inkling, Push Pop Press (scooped up last fall by Facebook), and my current favorite, Touch Press.

If you own an iPad you’ve probably heard about Touch Press’s blockbuster title The Elements. This brilliant interactive tour of the periodic table has been downloaded more than 280,000 times, which is pretty amazing considering the app’s subject matter, with its heavy whiff of high-school chemistry, and its relatively steep price ($13.99). But Touch Press has eight other lesser-known titles that are just as worthwhile—including one released just last week called Leonardo da Vinci: Anatomy. I’m such a Leonardo freak that my Xconomy colleagues made me promise some time ago to keep the da Vinci references in my articles to a minimum. But the new Touch Press app, released in conjunction with an exhibition of Leonardo’s anatomical drawings in Britain, gives me a great excuse to break that promise this week.

It’s good to be the queen. Thanks to her acquisitive predecessor Charles II (1630-1685), Elizabeth II is the proud owner of more than 600 Leonardo drawings and manuscripts, about half of them documenting the proto-scientist’s exploration of human and animal anatomy. This summer, hundreds of those drawings have been removed from their cases at Windsor Castle and are on display at Buckingham Palace as part of an exhibition called Leonardo da Vinci: Anatomist. The show runs through October 7, if your plans happen to take you to London.

If they don’t, the Touch Press app is an excellent substitute. It’s mainly an interactive book, explaining in 11 chronological chapters how Leonardo got started as an anatomical investigator and how, over time, his dissections and drawings allowed him to push past many (but not all) classical misconceptions about how the human body works. Much of the text is standard exhibit-catalog fare, but in the Touch Press version each chapter is augmented with expert video interviews and Touch Press’s signature 3-D, rotating models. Comparing the drawings to the models demonstrates the uncanny accuracy of Leonardo’s eye, centuries before anatomists developed conveniences like autopsy rooms, embalming fixatives, and scanners.

In addition to the interpretive material, the app includes a digital archive of 268 drawings from the Royal Collection, reproduced in extremely high resolution. On the 3.1-megapixel screen of the third-generation iPad, the art is stunning. Martin Clayton, the senior curator of prints and drawings at the Royal Collection and the organizer of the exhibition, claims in this video that the details are “easier to see in the app than in the original drawings themselves.” I can buy that, given that the journals Leonardo used often had pages smaller than the iPad’s screen. (The page with the sectioned skulls, shown here, measures only 18.8 by 13.4 centimeters. The iPad’s screen is 19.8 by 14.8 centimeters. Which begs the interesting question: what might Leonardo have accomplished if he’d had an iPad?)

As an added bonus, the Touch Press app can be toggled to show English translations of Leonardo’s mirror-script notes. That may be an homage to a 1996 Corbis production called Leonardo da Vinci, which had a similar feature called the “Codescope.” In my estimation, the Corbis title—which included a reproduction and translation of the Leicester Codex, a Leonardo notebook owned by Bill Gates—represented the apex of the whole CD-ROM movement. It’s great to see … Next Page »

Verdezyne, the Carlsbad, CA-based company developing industrial biotechnology processes for making adipic acid and other sustainable chemicals and fuels, has raised more than $10.6 million, according to a recent regulatory filing.

A spokesman for the company confirmed the financing, but would not comment beyond the filing, which shows the financing consisted of debt and rights to acquire securities.

Last year at this time, Verdezyne raised an undisclosed amount of funding from BP Alternative Energy Ventures, DSM Venturing B.V., OVP Venture Partners, and Monitor Ventures. Previous investors include Southern California’s Tech Coast Angels, the Life Science Angels, and other individual investors.

Massachusetts’ Vertex and San Diego’s Celladon are advancing some promising gene therapy treatments. Here’s our roundup of life sciences news over the past week.

—San Diego’s Celladon, which is developing a gene therapy to treat patients with a certain type of heart failure, extended a recent investment round by $10 million. Two new investors, MPM Capital and LSP Life Sciences Partners, increased Celladon’s current round to $53 million. Celladon’s gene therapy is intended to restore a key enzyme that helps a healthy heart maintain a normal heartbeat.

—Cambridge, MA-based Vertex (NASDAQ: VRTX), which has operations in San Diego, reported that a combination of its ivacaftor (Kalydeco) therapy and an experimental drug called VX-809 significantly improved lung function for adult patients with the most common genetic mutation (F508del) in cystic fibrosis. The FDA approved ivacaftor in January for treating CF patients with a different mutation (G551D).

—San Diego’s MediciNova (NASDAQ: MDNV) says it is nearing completion of a mid-stage trial of its lead drug candidate, bedoradrine sulfate. MediciNova licensed the compound from Japan’s Kissei Pharmaceutical, and has been advancing the drug as an intravenous treatment for treating acute asthma attacks. MediciNova expects to report results of its latest trial in the next six weeks or so.

—Luke voiced support in his BioBeat column for legislation known as the Generating Antibiotic Incentives Now (GAIN) Act. The bill would provide antibiotic developers an additional five years of market exclusivity for their products.

—Just in time for the Hologic acquisition, San Diego’s Gen-Probe (NASDAQ: GPRO) said the FDA cleared its new molecular diagnostic platform, the Panther system. Gen-Probe says its technology can initially be used to test for the common sexually transmitted infections Chlamydia trachomatis and Neisseria gonorrhoeae. Hologic disclosed its plans to acquire Gen-Probe in a $3.7 billion deal earlier this month.

Are successful entrepreneurs born with an innate sense that tells them which risky business bets will pay off? Or is this a skill that that can be learned over time?

To Babson College President and Xconomist Leonard “Len” Schlesinger, the answer to both questions is yes. There are occasional business prodigies like Steve Jobs who always seem to know what decisions are required to bring about fundamental change in the face of potentially crippling uncertainty. But the rest of us mere mortals can cultivate the same ability—all it takes is practice.

That’s the key message of Just Start, the book Schlesinger recently co-wrote with organizational-learning expert Charles Kiefer and journalist Paul Brown. The book is, in part, a manual for the proto-entrepreneur—the dreamer who has an idea that might change her career or her business, if only she can figure out how. But it’s also an introduction to the philosophy that’s been taking root at Babson ever since Schlesinger took the helm in 2008.

Though the Wellesley, MA-based school is consistently ranked as one of the top schools for undergraduates and MBA students who want to be entrepreneurs, Schlesinger and the faculty at Babson have been busy lately trying to figure out what entrepreneurship really is. And they’ve concluded that more than anything else, it’s a way of coordinating thinking and doing. (In fact, the first sentence of Babson’s mission statement now reads “Babson College will be known as the preeminent institution for Entrepreneurial Thought and Action.”)

Specifically, if you’re a would-be entrepreneur, Schlesinger and his co-authors advise you to engage in a methodical process of figuring out what youreally want; taking “smart steps” toward that desire (meaning, roughly, risking only as much as you can afford to lose); studying the outcome with a realistic eye; designing the next step based on what you’ve learned; and so on.

Their shorthand for this procedure is “creaction”—a portmanteau word combining creation and action. Schlesinger has had a taste of both, having spent 20 years teaching at Harvard Business School before joining Victoria’s Secret owner Limited Brands, where he rose to chief operating officer. Businesses like Limited Brands used to plan based on past experience, but Schlesinger and his colleagues argue that predictive reasoning doesn’t work anymore in a world defined by economic upheaval and rapid technological change. Better, these days, to be the architect of your own fate. “Creaction boils down to this,” they write. “The future may or may not be like the past, but you don’t have to spend a lot of time wondering how it will play out if you plan to shape (i.e., create) it.”

I connected with Schlesinger by phone last month and asked him how the book came about and what he hopes readers will learn from it. Here’s an edited summary of our conversation.

Xconomy: Why did you want to write this book?

Len Schlesinger: I have now been president of Babson for four years, and a large part of that process has been a strategic review of the institution. It became very clear that even here there was a very narrow view and definition of entrepreneurial activity and entrepreneurship—it was restricted to startup-related activity and ignored a lot of the other environments in which entrepreneurship is appropriate. I thought that from a marketing position, as well as an intellectual position, that was limiting the ability of the institution to stake out a point of differentiation and to have a bigger impact on the world.

X: So it sounds like you wanted to write a book that would cover all those other situations where entrepreneurial thinking is appropriate. But right in the introduction, you say that the book you ended up with isn’t the book you originally set out to write.

LS: When we sat down, we were going to write this cutesy book about how entrepreneurs think differently. And we discovered that the world didn’t need another one of those. Given everything that was going on around the campus, there was an opportunity to actually work from the experiences of entrepreneurs. So over the course of about 18 months of playing with a bunch of other folks, we tried to outline a concrete method and to take a more ambitious perspective than just the cutesy thing about thinking differently.

X: But cutesy or no, entrepreneurs really do think differently from other people, don’t they?

LS: Oh, there’s no question about it. The research is incontrovertible. Starting with the work of Saras Sarasvathy, there’s been a recognition that the thought and action patterns of successful serial entrepreneurs are almost antithetical to the logic of what I will call the large, corporate, prediction-oriented manager. And I believe the skills of being able to conceptualize and lead an entrepreneurial life are going to be increasingly critical in a world where the levels of uncertainty are as high as they are, and the levels of predictability in one’s career are as low as they are.

At some point, the only tool you have in your arsenal is to act. And there are smart ways to act, learnable from successful serial entrepreneurs, that anybody can use to increase their capacity to … Next Page »

Carlsbad, CA-based BeyondTrust, a network security company focused on protecting public companies against attacks from within, says it has acquired eEye Digital Security, a Phoenix, AZ-based company that helps defend networks from external threats.

Financial terms were not disclosed. Both companies are private.

Since moving to the San Diego area three years ago, BeyondTrust has targeted the global market of top public companies with software that controls user privileges on enterprise networks—and helps to protect against disgruntled employees and rogue IT system administrators. Its technology also helps public companies document their compliance with tightened regulations for managing internal financial controls, risk, and corporate governance.

Founded in 1998, eEye provides enterprise software, appliances, and services to help organizations protect their assets—including mobile, virtual, and data stored in the cloud.

While eEye is based in Phoenix, most of its employees work in Irvine, CA—less than 50 miles north of Carlsbad—according to Jim Zierick, an executive vice president at BeyondTrust. One of eEye’s key products discovers all the devices on a particular network, including network servers, desktop computers, laptops, and other devices. “It inquires how each one is configured, and determines whether that configuration is vulnerable to attack,” Zierick said.

Combining their respective technologies will enable customers to determine how vulnerable a user’s computer might be to malicious software, and to assess the user’s privileges and the sensitivity of data stored on the machine. eEye has more than 10,000 customers around the world, including small-to-medium businesses and government agencies.

The two companies already have been working together as partners, but Zierick said only about 20 percent of their businesses overlap. “There is definitely an opportunity here to expand each other’s customer base and to expose our customers to each other’s products.

The combined company will have more than 250 employees worldwide, including 100 in research and development, and is expected to generate about $70 million in annual revenue. When I talked with BeyondTrust in 2010, CEO John Mutch told me the company had about 85 employees and was generating about $50 million a year in sales.

AN OPEN LETTER TO PRESIDENT OBAMA

Dear President Obama:

As you and the rest of our nation’s leadership grapple with the momentous questions of restoring our collective financial stability and eminence, I am hopeful that some lessons from my background as an immigrant—now naturalized citizen—might prove instructive. The undeniable fact that runs throughout all the lessons I have learned, which seems to be overlooked by many in this country, is that America is truly the land of opportunity.

I arrived here from Iran as a young man, with some experience as a sales representative at my family’s pharmaceutical company. My father strongly encouraged me to get a “real education” and out of respect for him, I traveled to this land of opportunity, and earned an advanced science degree at the University of San Francisco. Fortunately for me, a chemistry professor at USF assumed the role of my mentor and convinced me to undertake a career in chemical research and discovery. As the doors to my native country closed as a result of the 1979 revolution, I arrived at the University of California-Davis, where I earned a Ph.D. in synthetic organic chemistry. The caliber of students and professors I have worked very closely with at every step of the way proved the U.S. educational system is truly second to none.

Since 1993, when I became a naturalized citizen, I have founded three scientific research and equipment companies. My first, located in Novato, California, manufactured approximately 80 environmental protection products and created over 30 jobs. In 2007, we were able to relocate the company’s manufacturing operations from China to the United States which added additional employment to the local economy. The company now distributes over 5,000 products around the world, and exports to countries such as China, India, Germany, and Russia. The drug discovery firm I founded and currently lead, NovaBay Pharmaceuticals, has raised over $43 million in capital, collaborates with major global pharmaceutical firms, and employs 28 scientists and other employees. We are now in advanced human clinical studies with a totally new class of drug to treat a variety of infections without contributing to the worldwide crisis of antibiotic resistance.

President Obama, I believe my amazing journey of discovery, value and job creation could not have happened anywhere else in the world; nor do I believe it could have happened at any other time in history.

Lessons I have learned, which might be instructive, include an emphasis on a liberal, or at least flexible, immigration policy. I am afraid the open door policies of 19th and 20th centuries have come to an end in the post- 9/11 era. America is justifiably concerned about its borders and security. So what can be done?

Critical Factors

People from around the globe, such as me, have flocked to America for centuries in search of freedom, higher education and the opportunity (not the guarantee) to better themselves; perhaps even create the next innovative enterprise that will change the world.

Innovation is the prime engine for job creation and economic recovery. Companies that are driven by it will have long-term success.

10 Point Plan

1. Let’s maintain America’s leadership in drug development and cost-effective healthcare by providing grants, loans and investments to small, capital-intensive biotech companies that employ less than 50 people. These companies create high paying jobs that cannot be exported easily to China, India or even Europe. The National Institutes of Health (NIH) is in a great position to evaluate novel technologies and make grants available to small startups with viable business plans. The NIH can be a de facto venture capital arm of the U.S. government; its grants can be converted into pro-rata equity ownership of these companies

2. Promote hiring of qualified, unemployed workers. Companies hiring workers who have been unemployed for more than 12 months (particularly war veterans), should be exempt from payroll taxes for three years.

3. Eliminate or reduce the onerous burden of “Sarbanes Oxley” regulations for companies with less than 200 employees, or under $200 million market capitalization. This will encourage capital formation through IPOs and investment in innovative technologies.

4. Provide research and development tax credits to large companies who partner with small start-up companies in order to cultivate job growth, innovation and collaboration.

5. Continue capital gains tax-free status for investments in small, less than $200 million market cap companies. Profits from these investments should remain tax-free if the investment is kept in those companies for at least five years. These companies are this nation’s job creation engine. They must be nurtured in the capital markets by the risk taking “smart money.”

6. Create incentives for government research labs and public universities to transfer technology to small start-ups in the private sector.

7. America must take a leadership role in the wise stewardship of the earth’s resources. The world’s rivers, bays, oceans and global weather are at risk because of our careless activity today and, if we’re not diligent, for the foreseeable future. Every year when I travel to China on business, I am always amazed by the lack of interest in recycling and the worsening of pollution.

8. Invest in education. When I attended, quarterly tuition at UC Berkeley or UC Davis was $200; today it has risen to $12,000. We need to maintain our world class higher education while making it affordable for all. Many of our leading scientists and engineers would not have been able to earn their education if tuition costs were prohibitive.

9. Use diplomacy and financial aid to wage peace worldwide. An investment in creating peace will have a fantastic return.

10. Create an “open door,” welcoming visa policy for talented immigrants. Create incentives and reduce hurdles for gifted foreign students who want to stay in the United States. Recently, my company attracted the attention of a brilliant Korean graduate student from UC Berkeley, whom we tried to keep in the United States. The sheer volume and complexity of the attendant bureaucracy became overwhelming for both my company and the Korean scientist. He eventually gave up and is now a Professor of Biochemistry at one of the most prestigious Korean academic institutions. An unfortunate loss for the collective U.S. brain trust.

Mr. President, the United States is truly the land of unparalleled opportunity, a phenomenon that few who are native-born may appreciate fully. A vision of cultivating innovation, and a nurturing environment that welcomes immigrants whom will add value and wisdom, will foster our great nation’s security and ensure our freedoms and worldwide leadership into the future.

The pieces are in place for Facebook’s IPO next week—not only has the company set its stock price range and updated its Q1 numbers, it has also attempted to de-risk the biggest perceived risk in the first draft of its S-1: exposure to mobile competition. Facebook bought Instagram for $1 billion, which ostensibly will help it approach mobile social interaction in a more engaging way. But it hasn’t done anything to address its exposure to other addictive consumer applications that could whittle away at its users’ engagement over time. Namely, the most risky applications involve social commerce, and the elephant in the room as it relates to physical goods, not virtual goods, is Pinterest.

There are rumors that Facebook will announce a major eCommerce move just before its IPO in May. That is still possible, but given that its social commerce brainchild, Beacon, flopped in 2007, an unproven eCommerce-related endeavor branded by Facebook would be a hugely risky move. Unlike its answer to potential competition in the mobile space, Facebook is leaving eCommerce risk unanswered one way or the other.

In a Forrester report last April entitled, Will Facebook Ever Drive eCommerce? Demystifying The Hype For Retail eBusiness Executives, analyst Sucharita Mulpuru summarized:

“In spite of the fact that hundreds of millions of people around the world have Facebook accounts, the ability of the social network to drive revenue for eCommerce businesses continues to remain elusive. eBusiness professionals in retail collectively report little direct or indirect benefit from Facebook, and social networks overall trail far behind other customer acquisition and retention tactics like paid search and email in generating a return on investment.”

Is it possible that Facebook has concluded it is simply a social destination (and I use “simply” lightly because becoming a huge social destination with metrics like it has is not simple) that will engage users and disrupt the online (and ostensibly mobile) advertising spaces? Like Google, Facebook’s predominant source of revenue is advertising. Facebook’s payments and credits program generates revenue through social gaming, but this is largely contributed by Zynga. Like Google, Facebook has not proven that it can incubate and release vertical user applications that are monetized through means other than advertising.

However, Facebook is planning to go public at a valuation four times the size of Google’s IPO valuation. I see no other way to justify this without a belief that Facebook has a more diversified revenue base than Google, and that isn’t certain. Yes, it has a myriad of opportunities to grow its advertising revenue, but if you believe Facebook’s valuation could double over time (and you should if you plan on buying it), you should be betting on its advertising revenue growth and not potential diversification through eCommerce or other related streams.

I would expect that new companies, Pinterest included, will continue to take the eCommerce route in an effort to compete with Facebook. It’s my bet that someone other than Facebook will solve the social commerce experience for physical purchases, and this should be a very interesting space to invest in over the coming months.

[Corrected 5/7/12, 5:10 pm. See below.] When Yuichi Iwaki started MediciNova in 2000, he says many mid-size pharmaceutical companies in Japan had concluded it was just too difficult to conduct their own clinical trials in the United States. So MediciNova was born of a kind of Japanese pragmatism.

“Mid-size Japanese companies did not have the financial resources,” Iwaki tells me. “If they have compound, they did not know how to do business in the U.S. That’s the reason I was able to in-license tremendous compounds for minimal payment.”

In the 12 years since MediciNova set down its roots in San Diego, the biopharmaceutical startup has licensed eight compounds (seven from Japanese pharmas and one from the U.K.), raised more than $280 million, and become a public company (NASDAQ: MNOV), with trading on the Nasdaq global market and Japan’s Osaka Securities Exchange.

“In the past seven and a half years, we’ve spent $270 million to get to this level,” says Iwaki, who also is a professor at the University of Southern California School of Medicine and director of USC’s Transplantation Immunology and Immunogenetic Laboratory. “It’s not an easy path, but we believe we are getting closer to the goal.”

Yuichi Iwaki

Iwaki, a Japanese-trained surgeon who came to the United States in the 1980s, is particularly hopeful about MediciNova’s lead drug candidate, bedoradrine sulfate, a compound licensed from Japan’s Kissei Pharmaceutical for use in the United States as an intravenous treatment for treating acute asthma attacks.

MediciNova says its drug has a key advantage over the current standard of care in U.S. emergency rooms, which typically use an inhaled drug like albuterol. An asthma patient’s constricted airways can limit the effectiveness of aerosol drugs, which creates some uncertainty over how much of a given drug has been absorbed. Because bedoradrine is delivered … Next Page »